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Fingers Still Pointing, NBC and O’Brien Reach a Deal

The end of the Conan O’Brien chapter of “The Tonight Show” was officially hammered out on Thursday with a lot of money — and some parting recriminations — being dished out.

Mr. O’Brien’s settlement with NBC will pay him $32.5 million, essentially a buyout of the remaining two and a half years of his guaranteed contract. His salary, which has never been confirmed, has been estimated at $12 million to $15 million a year. His last show will be Friday night, and NBC will reinstate Jay Leno as host of the “The Tonight Show” on March 1.

NBC will also pay about $12 million to settle the contracts of others associated with show, including Mr. O’Brien’s longtime executive producer and closest colleague, Jeff Ross. Some of the last-minute discussions concerned the severance that NBC will pay to staff members who do not have contracts.

In one coincidence noticed throughout the television business, the total amount that NBC is paying — about $45 million — is precisely the amount that NBC had promised Mr. O’Brien as a penalty payment if he did not get “The Tonight Show” when it was first promised to him in 2004. In that case, he would have received the entire amount himself, however, not sharing with his staff.

Jeff Gaspin, the chairman of NBC Entertainment, called the deal “a settlement that worked for both sides.”

NBC executives emphasized that the network had paid $600,000 beyond the standard severance for Mr. O’Brien’s staff and sought to make it clear that it was a network decision to add that money.

Gavin Polone, Mr. O’Brien’s manager, agreed with that characterization. “They did step up, and Conan is appreciative of that,” Mr. Polone said. But he stressed that Mr. O’Brien had committed to paying additional money to staff members who had lost jobs with the end of the show. Many of them sold homes in New York and moved to Los Angeles to follow Mr. O’Brien.

Mr. Polone said, “Conan is paying them more beyond that out of his own pocket — a large seven-figure amount.”

In defending the decision to alter NBC’s late-night lineup — a decision that originally asked Mr. O’Brien to slide back a half-hour, to 12:05 a.m., to make room for Mr. Leno — Mr. Gaspin repeated his argument that the network had never wanted to lose Mr. O’Brien.

Mr. Gaspin agreed with the argument made by many fans of Mr. O’Brien, that if the host had been allowed to stay on the show, he had a good chance to increase his ratings over time.

“Could it have grown? Absolutely,” Mr. Gaspin said. “We just couldn’t give him the time.” He pointed to the pressure that was being exerted by NBC’s affiliated stations for the network to change its 10 p.m. lineup, where Mr. Leno had been moved.

“Our hand was forced,” Mr. Gaspin said.

But he went to some lengths to justify the network’s lineup change. “For the first time ever, ‘The Tonight Show’ is going to lose money this season,” Mr. Gaspin said. While he declined to name a figure, he said it amounted to “tens of millions of dollars.”

The reason for the loss, Mr. Gaspin said, was a falloff in ratings for “Tonight” that was far worse than NBC had expected. He said the ratings for NBC’s local newscasts, the direct lead-in to Mr. O’Brien, were down on average about 14 percent among households, and Mr. O’Brien was off by 49 percent compared with Mr. Leno’s audience the year before.

In the 25 to 54 age group, the lead-in was down 16 percent, and Mr. O’Brien was down 31 percent, Mr. Gaspin said. And in the most important late-night audience — viewers ages 19 to 49, where Mr. O’Brien has always been strongest — he was down 23 percent, while the newscasts were down only 16 percent, Mr. Gaspin said.

Mr. Polone said he “did not know NBC’s financials,” but cited advertising figures and demand that he said still seemed strong for the show.

This week, as Mr. O’Brien came out swinging against NBC, his ratings soared.

“In the end, Conan will benefit from this,” Mr. Polone said.

The settlement allows Mr. O’Brien to come back with a new show as early as September. Mr. Polone said he and Mr. O’Brien’s agents would begin soliciting offers for him immediately with a goal of landing a new network show as close to that date as possible. The Fox network has already expressed interest in that option.

Whenever Mr. O’Brien returns to television, his show is likely to look significantly different. NBC is claiming that it owns all the comedy bits that were created during Mr. O’Brien’s run, first on the network’s “Late Night” show and for the last seven months on “Tonight.”

That includes one of the most recognizable comedy characters of recent years, Triumph, the Insult Comic Dog. The character was created by Mr. O’Brien’s onetime writer and longtime friend Robert Smigel, and NBC claims it owns the character in partnership with Mr. Smigel.

NBC also can — and apparently will — claim ownership of other signature comedy bits created on Mr. O’Brien’s shows, including some of his classic routines like “The Year 3000” and Conando.

One member of Mr. O’Brien’s staff said the group was unperturbed and was planning to come up with new routines — or maybe some clever variations on the old ones.

NBC also had some concern that Mr. O’Brien might take his anger with the network to the next step. He might seek to undermine Mr. Leno’s return to “Tonight” by making a guest appearance with David Letterman on CBS — or maybe Jon Stewart or Stephen Colbert on Comedy Central — on the first night Mr. Leno returns to “Tonight.”

However, one participant in the discussion said that possibility was addressed in the settlement: Mr. O’Brien will not be able to do any interviews for a period that extends beyond the date of Mr. Leno’s March 1 return.

A version of this article appears in print on January 22, 2010, on page A3 of the New York edition with the headline: Fingers Still Pointing, NBC and O’Brien Reach a Deal. Order Reprints|Today's Paper|Subscribe